As frontier AI model providers increase their prices, some Canadian startup leaders that rely on them are evaluating alternatives to alleviate the high costs.
The news: Leaders from a handful of Ottawa-based companies talked about the quirks of building in the AI era in a panel discussion at AccelerateOTT on Thursday morning.
The founders of Pluvo, Fellow, Backboard.io, Compose Health, and Rewind spoke on how they’ve changed hiring practices and become faster at pushing code using AI tools, but also how using those tools is costing them more and more.
From the source: “I think with OpenAI and Anthropic filing for their IPO and seeing the numbers, you can see that the [AI] prices are going to increase again,” Pluvo CFO and COO Vanessa Galarneau said on stage, noting that compute is also harder to come by. “We’re weary of that, because we can’t just have all of our productivity crash because we don’t have compute or we need to pay Anthropic thousands of dollars.”
Following the thread: Fellow CEO Aydin Mirzaee said his company is paying Anthropic seven figures per year. Half of his team is using the “insanely expensive” Cursor coding tool, where it’s easy for a single developer to spend up to $2,000 per month, on top of other AI tools that cost thousands.
Both Mirzaee and Backboard.io CEO Rob Imbeault said they have migrated AI models based on promotions or credits. They and other panelists also spoke about potentially exploring non-frontier models, with Rewind CEO Mike Potter noting that open source models are starting to catch up in terms of performance.
Final thought: Anthropic just released its newest model, Fable, which costs twice as much to use as the company’s previously most-expensive, Opus 4.8 model. While Galarneau foresees Anthropic and OpenAI’s short-term public markets quest to increase prices due to their “really, really terrible” operating margins, the competition might benefit users in the end.
The Wall Street Journal reported this week that OpenAI is considering drastic price cuts to win over users from Anthropic, which it anticipates will cut prices in response as well.
Feature image courtesy Alex Riehl for BetaKit.